If a firm can sell its product for more than its fixed costs,but not for more than its totals costs:
A)It will shut down
B)It will lower its fixed costs
C)It will stop producing that product
D)It will continue to operate in the short run at a loss
E)It will increase its production quantity

Question

Quizplus · Accepted Answer

If a firm can sell its product for more than its fixed costs, it is covering at least some of its variable costs. In the short run, it may choose to continue operating at a loss as long as it can cover its variable costs and make some contribution towards its fixed costs. In the long run, the firm may need to make adjustments to its production or pricing strategy to become profitable. Therefore, the best choice is D - the firm will continue to operate in the short run at a loss.

If a Firm Can Sell Its Product for More Than